Together with your team, every employee has been working hard to create something significant. You’ve witnessed it all—the late nights, the product changes, the “all-hands” meetings. The business is now going public. Isn’t it exciting? However, it’s also a bit overpowering.
An IPO (Initial Public Offering) represents a significant change for everyone, including you, and isn’t only a victory for the investors and creators. Here are some important things for employees to know before the stock exchange bell rings and champagne is raised in celebration.
1. Recognize the True Significance of an IPO
Let’s begin with the fundamentals. An IPO is the first time a private company makes stock publicly available. It adds a new degree of accountability, raises visibility, and attracts funding. On the inside, however, it implies adjustments to expectations, structure, and culture for every employee, sometimes little, sometimes major.
2. Your Stock Options – Understanding What You Own
A lot of workers receive RSUs (Restricted Stock Units) or stock options as part of their pay. However, what is their true value? After your business goes public:
Schedules for Vesting Are Still in Effect: All your shares do not automatically vest when you go public.
Taxes Can Be Complex: Uncle Sam will knock on your door if you sell shares or exercise your options. Be aware of your tax obligations in advance.
There May Be Limitations on Sales: Following the IPO, there is often a lock-up period (typically six months) during which you are unable to sell your shares.
3. Anticipate a Change in Culture
Startups are nimble, adaptable, and a little untidy. Public businesses are scrutinized. HR policies, documentation, and compliance all became more stringent. The organization you joined may begin to feel more corporate. That’s different, but not necessarily terrible — every employee just needs to adjust to the evolving structure.
4. There Will Be a Shift in Performance Metrics
Going public entails shareholder pressure and quarterly earnings calls. Anticipate a change toward quickly achieving financial goals. Your team may prioritize revenue over exploration. The mindset of “move fast and break things” could change to one of “move smart and manage risk.”
5. There Will Be More Guarded Communication
Do you recall those open town halls and Slack conversations? They might be further filtered. Your business is subject to SEC rules after it goes public. Leadership will therefore have to exercise caution in deciding what information to convey and how.
6. It’s Normal for You to Feel Left Out
IPOs have the potential to establish a hierarchy, let’s face it. Early workers may have transformative benefits. Newer employees may feel like they were left behind. Avoid making comparisons. Every employee’s path is unique, and there are multiple paths to accumulating riches and a fulfilling job.
Lastly, Don’t Be Scared to Ask Questions
Understanding your function in a public company doesn’t require you to be a finance expert. However, you must ask questions. Speak with HR. Speak with your manager. Consult a tax expert. You put much effort into creating this business; be sure you know enough to reap the benefits.